In the ETF space, success begets success.
Just look at what Invesco is doing today. They’re launching a new product, the NASDAQ Next Gen 100 ETF (QQQJ).
It might more appropriately be called the Nasdaq 100 Junior Varsity list.
The Invesco QQQ Trust (QQQ) started tracking the NASDAQ-100 Index in 1999. Since then, it’s become the fifth-largest ETF listed in the U.S., with $135 billion in assets under management.
Now Invesco is looking to capitalize on the interest in technology and growth stocks by offering a new “junior” QQQ.
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Any why not? QQQ is up nearly 40% this year. Shares outstanding are up nearly 20% since March, a sign of the exploding interest in the growth stocks the fund is famous for.
The Invesco NASDAQ Next Gen 100 ETF will consist of 100 mid-cap companies that are using technology in interesting or innovative ways. Included are obvious tech choices like Seagate and internet security firm Zscaler, but also companies like Garmin, Lyft, and social game developer Zynga, not necessarily tech companies.
Why, in an ETF known for tech heavyweights, would they want to include non-tech companies?
“QQQJ will give investors access to 100 mid-cap companies using technology to disrupt their sector,” John Hoffman, Invesco’s Head of Americas ETFs, told me in an email. “While this does include companies in the technology sector, the commonality across these companies is their legacy of using innovation and technology to create competitive advantages across multiple sectors and industries.”
Besides, the NASDAQ 100 has never been exclusively about tech; it’s always had a healthy weighting of consumer stocks (Pepsi), consumer cyclicals (Costco, Starbucks), and even health care (Amgen).
This junior QQQ is part of a series of new products Invesco is launching around the QQQ today, which Invesco is calling an “Innovation Suite.” Also launching is the Invesco NASDAQ 100 ETF (QQQM), a lower-cost version of the QQQ for longer-term buy and hold investors, Invesco NASDAQ 100 Index Fund (IVNQX), a mutual fund tied to the QQQ for investors (like some retirement plan advisers) who can’t invest in ETFs but can invest in mutual funds, and the Invesco NASDAQ-100 Growth Leaders Portfolio (QQQG), a unit investment trust.
This isn’t the first time we have seen a “junior varsity” version of an ETF. In 2009, Van Eck, on the heels of its very successful Gold Miners ETF (GDX), launched its Junior Gold Miners ETF (GDXJ), which since has become a regular part of the gold trading space.